Personnel Management

Should I Hire an Employees or Contract Service?

In today’s economy, business is often faced with the question of filling manpower needs by hiring an employees or using outside contract services. There are benefits with each option and this article should provide insight into some of the benefits of each approach.

Hiring employees:

The primary benefit may be with control over the employee. The business has the right to hire/fire, determine salary and working conditions. Generally with employees there is a higher level of commitment to the organization and a desire to contribute and help the business grow over the longer term.

Employees will be seen to be more a part of the team and individuals work harder at establishing strong inter-personal relationships with other employees. Loyalty and commitment increase.

In smaller organizations, employees often fill multiple roles. This increases learning opportunities and can increase productivity.

Contracting for service

This approach is simpler and may be less expensive. The business does not have to provide benefits so there is an immediate and potentially long term savings. Overhead costs are reduced.

Management of the process is simplified, the employer does not have to withhold income taxes, or pay a share of CPP or EI.

There is a tax advantage that accrues to the employer as a result of the potential tax deduction for contract services.

There is greater flexibility in controlling the term of service.

These are a few of the issues to consider. You may have other thoughts to share. Please let me know.

gerry@polarisgroupmc.com